Indian Rupee Rises

India's rupee rose, ending two days of losses, on speculation the central bank will seek gains in the currency to curb the fastest price increases in 16 years.

Asia's third-largest economy, which meets three-quarters of its energy needs from overseas, is grappling with inflation at the fastest since July 1992. The rupee climbed from yesterday's 17- month low, gaining for the first time this week.

The rupee strengthened 0.2 percent to 43.75 a dollar as of the 5 p.m. close in Mumbai, according to data compiled by Bloomberg.

A government report tomorrow may say India's benchmark wholesale-price growth rate accelerated to 12.8 percent in the week ended Aug. 16, the fastest since June 1992, according to the median estimate in a Bloomberg News survey.

India's foreign-exchange reserves fell for a fifth week through Aug. 15, the longest stretch of declines since November 2000, indicating the central bank sold dollars to support the rupee. Central banks intervene in currency markets by arranging the sale or purchase of foreign exchange.

India's foreign-currency reserves dropped to $286 billion in the week ended Aug. 15 from a record $306.2 billion in May, according to data provided by the central bank.

Indian Rupee Rises, Bloomberg
8/27/2008 5:35:36 AM